Frustrated by the ever-increasing pile of paper on your desk?
Take some time now to organize your finances and reduce your paper clutter. The trouble is, you might not know when you can go entirely paperless, and when it makes sense to hold onto things. Read on for some simple rules that can help.
When it comes to tax-related documents, it’s no longer necessary to keep paper versions of everything. The Internal Revenue Service (IRS) accepts electronic records, and most financial institutions offer access to statements online. That said, it’s important to keep the supporting documentation from your tax returns—whether paper or electronic—for at least seven years in case you’re ever audited by the IRS. It may be a good idea to keep your tax returns indefinitely, should you or your heirs need to access the information they contain.
Whether you choose to house them electronically, in paper form, or both, these additional documents should be included in your personal financial records:
Even if you keep paper versions of this documentation, it’s a smart idea to have electronic backup copies. You can scan your paper copies and store the electronic versions on CDs, thumb drives, external hard drives, or with online services.
Now that you know which documentation you should keep, it’s time to find out what you can purge. The following items can go into the shredder:
To keep the paper from piling up in the first place, see if there are any ways you can reduce paper in general. Consider paperless billing and statements and automatic online payments for utilities. For documents you want to file in paper form, an organizing system such as an expanding file with alphabetical labels can help you keep everything in one place.
Though organizing your finances may take some work up front, it will save you time in the long run. You’ll know exactly where to go to find specific documents and what to do with those you acquire on a day-to-day basis.
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